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Relx held talks with investors to ditch UK listing for New York

Publishing Giant Relx Eyes New York Switch: Top Exec Holds Talks with Investors on Ditching UK Listing

In a move that could deal another blow to London's beleaguered stock market, a senior executive at Relx, the FTSE 100 publishing and data analytics powerhouse, has been engaging in discussions with major investors about potentially abandoning its primary listing on the London Stock Exchange in favor of New York. This revelation comes amid growing concerns over the attractiveness of the UK as a hub for global listings, with companies increasingly lured by the deeper pools of capital and higher valuations available across the Atlantic.

Relx, formerly known as Reed Elsevier, is a multinational conglomerate with a market capitalization exceeding £70 billion. The company operates across diverse sectors, including scientific publishing through its Elsevier division, legal information services via LexisNexis, and risk analytics tools that serve industries from insurance to aviation. Its shares are currently dual-listed in London and Amsterdam, reflecting its Anglo-Dutch heritage, but the primary trading venue remains the UK. However, sources close to the matter indicate that a top executive—believed to be from the upper echelons of management—has been sounding out key shareholders on the merits of shifting the main listing to the New York Stock Exchange (NYSE).

These informal talks, which have reportedly taken place over recent months, are part of a broader strategic review as Relx seeks to maximize shareholder value in an era of rapid technological disruption and evolving market dynamics. Insiders suggest that the discussions have centered on the potential benefits of a US primary listing, such as access to a larger investor base, including tech-savvy funds that might better appreciate Relx's growing focus on data-driven services. The company's analytics arm, for instance, leverages artificial intelligence and big data to provide insights for decision-makers in finance, healthcare, and beyond, aligning it more closely with the innovation-driven ethos of Wall Street.

The impetus for this potential shift is multifaceted. London's stock market has been grappling with a series of high-profile defections and snubs in recent years. Chip designer Arm Holdings, a British success story, opted for a New York flotation last year despite pleas from UK officials to list domestically. Similarly, mining giant Glencore and building materials firm CRH have either moved or considered moving their primary listings abroad. Relx's deliberations echo these trends, fueled by perceptions that US markets offer superior liquidity, higher multiples, and a more favorable regulatory environment for growth-oriented firms.

One key factor driving such considerations is the valuation gap between UK and US-listed companies. Relx's shares, while performing strongly—up around 20% over the past year—trade at a price-to-earnings ratio that some argue undervalues its potential compared to American peers like S&P Global or Thomson Reuters. A New York listing could unlock this "discount," attracting index funds and passive investors tied to major US benchmarks such as the S&P 500. Moreover, the US market's depth allows for easier capital raising, which could fund Relx's ambitious expansion into emerging technologies like AI-powered risk assessment and predictive analytics.

The executive's outreach to investors has not been without controversy. Some UK-based shareholders have expressed reservations, viewing the move as a betrayal of Relx's British roots. Founded in the 19th century as a publisher of trade journals, the company has deep ties to the UK, employing thousands and contributing significantly to the economy through taxes and innovation. A switch to New York could diminish London's status as a financial center, exacerbating the post-Brexit exodus of listings. Critics argue that this trend reflects broader issues plaguing the City, including regulatory burdens, a lack of domestic pension fund investment in equities, and competition from more dynamic exchanges in New York and even Amsterdam.

Relx itself has downplayed the speculation, with a spokesperson emphasizing that no formal decisions have been made and that the company remains committed to its current structure. "We regularly engage with our investors on a range of strategic matters," the statement read, "and any changes to our listing would be carefully considered in the best interests of all stakeholders." However, the fact that such talks are occurring at a high level suggests the idea is gaining traction internally. Analysts point to Relx's evolving business model as a catalyst; once primarily a publisher of academic journals, it now derives over 80% of its revenue from digital and analytics services, making it resemble a tech firm more than a traditional media company. This shift has already prompted comparisons to Silicon Valley darlings, further fueling the case for a US pivot.

The broader implications for the UK market are profound. If Relx proceeds, it would join a growing list of blue-chip firms questioning London's allure. The London Stock Exchange Group (LSEG) has been actively campaigning to retain and attract listings through initiatives like relaxed listing rules and tax incentives, but these efforts have yielded mixed results. For instance, the UK's "golden share" in companies like BAE Systems has deterred some foreign takeovers, but it hasn't stemmed the tide of companies seeking greener pastures. Relx's potential departure could accelerate calls for reform, with industry bodies urging the government to address structural weaknesses such as low retail investor participation and the dominance of foreign ownership in FTSE stocks.

Investors, meanwhile, are divided. Some see the move as a pragmatic step to enhance value, particularly given Relx's strong performance under CEO Erik Engstrom, who has steered the company through a digital transformation since taking the helm in 2009. Under his leadership, Relx has divested non-core assets, invested heavily in data platforms, and delivered consistent dividend growth, making it a favorite among income-focused funds. A New York listing might amplify this appeal, drawing in US institutional investors who have historically underweighted European stocks.

On the flip side, skeptics warn of risks, including increased exposure to US regulatory scrutiny—such as from the Securities and Exchange Commission (SEC)—and potential currency fluctuations. Relx's shares are denominated in pounds, but a full switch could involve complex restructuring, possibly including a change in domicile or share class adjustments. There's also the cultural aspect: Relx's board and management are predominantly based in London, and a transatlantic shift might disrupt operations or alienate employees.

Looking ahead, the outcome of these talks could hinge on several factors, including market conditions, shareholder feedback, and geopolitical developments. With global interest rates stabilizing and tech valuations rebounding, the timing might be opportune for Relx to make its move. Yet, any decision would likely require board approval and possibly a shareholder vote, processes that could stretch into next year.

This episode underscores a pivotal moment for the UK as it navigates its post-Brexit identity. While Relx's executive has framed the discussions as exploratory, they highlight the gravitational pull of New York as the world's premier financial hub. For London to compete, bolder actions may be needed—perhaps emulating the US's ecosystem of venture capital and innovation incentives. In the meantime, investors and policymakers alike will be watching Relx closely, as its choice could signal whether the tide of defections is turning into a flood.

As the publishing giant weighs its options, one thing is clear: in an increasingly globalized economy, national borders matter less than market efficiencies. Relx's journey from a UK-centric publisher to a data behemoth exemplifies this evolution, and its potential listing switch could redefine its future—and that of the markets it calls home. (Word count: 1,048)

Read the Full This is Money Article at:
[ https://www.thisismoney.co.uk/money/markets/article-14938051/Top-exec-publishing-giant-Relx-held-talks-investors-ditch-UK-listing-New-York.html ]